Question
Question
Which of the statements below is an accurate description of the economy's reaction to changes in the reserve requirements (interest rates)?(1 point)
Responses
If the reserve requirements tightened, less funds are in reserves and banks do not have as much funds to lend, leading to a decrease in interest rates for customers and an increase in economic growth.
If the reserve requirements tightened, less funds are in reserves and banks do not have as much funds to lend, leading to a decrease in interest rates for customers and an increase in economic growth.
If the reserve requirements tightened, more funds are in reserves and banks do not have as much to lend, leading to an increase in interest rates for customers and a decrease in economic growth.
If the reserve requirements tightened, more funds are in reserves and banks do not have as much to lend, leading to an increase in interest rates for customers and a decrease in economic growth.
If the reserve requirements loosened, more funds are in reserves and banks do not have as much to lend, leading to an increase in interest rates and a decrease in economic growth.
If the reserve requirements loosened, more funds are in reserves and banks do not have as much to lend, leading to an increase in interest rates and a decrease in economic growth.
If the reserve requirements loosened, less funds are in reserves and banks would have more to lend, leading to an increase in interest rates and an increase in economic growth.
If the reserve requirements loosened, less funds are in reserves and banks would have more to lend, leading to an increase in interest rates and an increase in economic growth.
Which of the statements below is an accurate description of the economy's reaction to changes in the reserve requirements (interest rates)?(1 point)
Responses
If the reserve requirements tightened, less funds are in reserves and banks do not have as much funds to lend, leading to a decrease in interest rates for customers and an increase in economic growth.
If the reserve requirements tightened, less funds are in reserves and banks do not have as much funds to lend, leading to a decrease in interest rates for customers and an increase in economic growth.
If the reserve requirements tightened, more funds are in reserves and banks do not have as much to lend, leading to an increase in interest rates for customers and a decrease in economic growth.
If the reserve requirements tightened, more funds are in reserves and banks do not have as much to lend, leading to an increase in interest rates for customers and a decrease in economic growth.
If the reserve requirements loosened, more funds are in reserves and banks do not have as much to lend, leading to an increase in interest rates and a decrease in economic growth.
If the reserve requirements loosened, more funds are in reserves and banks do not have as much to lend, leading to an increase in interest rates and a decrease in economic growth.
If the reserve requirements loosened, less funds are in reserves and banks would have more to lend, leading to an increase in interest rates and an increase in economic growth.
If the reserve requirements loosened, less funds are in reserves and banks would have more to lend, leading to an increase in interest rates and an increase in economic growth.
Answers
GPT-4o mini
The correct response is:
**If the reserve requirements tightened, more funds are in reserves and banks do not have as much to lend, leading to an increase in interest rates for customers and a decrease in economic growth.**
When reserve requirements are tightened, banks must hold a higher percentage of their deposits in reserve and therefore have less money to lend out. This typically leads to higher interest rates because there is less supply of loanable funds. Higher interest rates can dampen borrowing and spending, which may consequently lead to a decrease in economic growth.
The other statements contain inaccuracies regarding the relationships between reserve requirements, lending capacity, interest rates, and economic growth.
**If the reserve requirements tightened, more funds are in reserves and banks do not have as much to lend, leading to an increase in interest rates for customers and a decrease in economic growth.**
When reserve requirements are tightened, banks must hold a higher percentage of their deposits in reserve and therefore have less money to lend out. This typically leads to higher interest rates because there is less supply of loanable funds. Higher interest rates can dampen borrowing and spending, which may consequently lead to a decrease in economic growth.
The other statements contain inaccuracies regarding the relationships between reserve requirements, lending capacity, interest rates, and economic growth.